Rick Holmes: Tough choices for Obama, America's new CEO

Conversations at this year's holiday parties aren't as festive as we're used to.

Rick Holmes

Conversations at this year's holiday parties aren't as festive as we're used to.

"People are being let go left and right, and it's killing those of us who are left," one friend told me over wine and Christmas cookies. "How are things at your job?"

"I'm looking at a washout for 2009," said a friend who owns his own business. "Just about all my customers have canceled. I'm hoping to recover in 2010."

"I heard about four friends just this week," someone else chimed in. "One from Raytheon, one from Fidelity, and two from EMC. All in their 50s and all laid off.

"They'll never again find work at the pay they've been making."

We're leaving 2008 amid empty cubicles and silent construction sites. One friend predicted that once the post-Christmas sales are through, a quarter of the stores in the malls will lock their doors and clear out. The most common shopping advice this year: Spend those gift cards quickly, before the store files Chapter 11.

The most common prediction for 2009: The economy will get worse before it gets better. That means more layoffs.

But layoffs shouldn't be the first step CEOs take when the economy heads south. Consider FedEx, which announced last week that, for the first time in 18 years, it won't advertise during the Super Bowl. The ads cost $3 million for a 30-second spot, and FedEx has a higher priority: protecting the jobs of its employees.

"As a responsible employer of more than 290,000 employees and contractors worldwide, there is a time to justify such an ad spend and a time to step back," the company announced. With business suffering, FedEx has frozen hiring, suspended its 401(k) match and cut salaries, but it has avoided, so far, mass layoffs.

FedEx isn't alone. The New York Times reports that "a growing number of employers, hoping to avoid or limit layoffs, are introducing four-day workweeks, unpaid vacations and voluntary or enforced furloughs, along with wage freezes, pension cuts and flexible work schedules. These employers are still cutting labor costs, but hanging on to the labor.

There are good business reasons for this. Most companies have been running leaner than ever, and don't have many slackers to clear out. The workers who remain are well-trained and work hard. Replacing them would be tough when the economy turns again.

Workers and even unions are encouraging alternatives to layoffs. The Times reports that the chairman of the faculty senate at Brandeis University is proposing faculty take a 1 percent pay cut to avoid layoffs.

One very important new CEO is thinking about this as well: President-elect Barack Obama.

"Part of what I'm hoping to introduce as the next president is a new ethic of responsibility where we say that, if you're laying off workers, the least you can do, when you're making $25 million a year, is give up some of your compensation and some of your bonuses," Obama said recently on "Meet the Press."

"Figure out ways in which workers maybe have to take a haircut, but they can still keep their jobs, they can still keep their health care and they can still stay in their homes. That kind of notion of shared benefits and burdens is something that I think has been lost for too long, and it's something that I'd like to see restored."

Obama can use his bully pulpit to encourage companies to pursue alternatives to layoffs, and it sounds like he will. He can also write hiring and termination policies that cover millions of federal employees, and millions more employees of federal contractors.

The recession is hitting government as well as the private sector. State government is already cutting spending. Cities and towns will have to trim their budgets as well, especially with a 10 percent reduction in state aid on the horizon. Maybe they'll take their cue from Obama, and look for ways to keep people on the payroll while saving money.

Instead of laying off a teacher, could two full-timers switch to part-time? Can police overtime be cut instead of police officers laid off? Will unions cooperate in these steps, or will they protect every penny made by longtime workers by throwing those with less seniority under the bus?

Obama won't just be the CEO of the federal government. He's is also about to take over the corner office of two of the nation's largest companies.

Under the terms of the deal struck by the Bush administration, GM and Chrysler have until Feb. 17 to submit plans to Washington for restructuring their businesses. Those plans must include reducing employee compensation, changing benefits and eliminating benefits for laid off workers.

If the companies don't fulfill the terms of the $13.4 billion in government loans by March 31, the president can demand they be paid within 30 days - likely forcing the companies into bankruptcy.

That means Obama - through whatever "czar" he appoints - will be signing off on plant closings, dealership reductions and layoffs up and down the automotive supply chain. He'll have a seat at the table when GM, Chrysler and the United Auto Workers negotiate changes in their contract.

He ought to be asking, like any good CEO, how much the car companies are spending on the Super Bowl - not just on ads, but on parties and tickets for the well-connected.

The same questions should be asked of all the companies being bailed out by taxpayers. While a few high-profile CEOs are giving up their bonuses this year, Wall Street firms are still paying out billions to traders and executives.

Then there's Citigroup, the recipient of $20 billion from the federal bailout fund. Yet Citigroup remains committed to spending $20 million a year for the next two decades to hang its name on the New York Mets' new ballpark.

No one intended for the president of the United States to be in charge of negotiating plant closings, pay reductions and naming rights for ballfields. There's real danger in getting politics involved in corporate business decisions. The only thing worse would be handing a trillion dollars of the taxpayers' money to CEOs who have already run their companies into the ground, without expecting anything in return.

Amid all the economic pain people in America and around the world are suffering, the last thing I worry about is NBC not having enough buyers for Super Bowl commercials. If corporate America decides to spend less money on luxury boxes and stadium naming rights so it can keep good workers on the job, that's fine with me.

An unprecedented crisis has put unprecedented power in the hands of America's new CEO. If he handles it well, maybe next year's holiday parties won't be so gloomy.

Rick Holmes, opinion editor of the MetroWest Daily News, blogs at Holmes & Co. (http://blogs.townonline.com/holmesandco). He can be reached at rholmes@cnc.com.